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Tuesday, July 28, 2009

WYPR Midday with Dan Rodricks: Cash for Clunkers and GPHM

Dan Rodricks of WYPR in Baltimore reviewed the details and merits of the Cash for Clunkers program on his July 27 broadcast. He invited me to join him to talk about the implications of "Gallons per Mile" for Cash for Clunkers. Here's the link to the broadcast.

In a nutshell:

1) Gallons per mile makes clear that national policy should focus on improving the fuel efficiency of the most inefficient cars, suvs, and trucks. The following table shows the gas consumption (per 100 miles) for different levels of mpg:

Thus, improvements of even 1 or 2 mpg in the "teens" can save about a gallon every 100 miles. That translates to 100 gallons every 10,000 miles, or one ton of carbon. That is the same amount of gas (and carbon) saved by replacing a 33 mpg car with a 50 mpg car. In fact, replacing a 14 mpg car with a 25 mpg car saves more gas (3 gallons per 100 miles) than any possible improvement on a 33 mpg car.

Cash for Clunkers makes sense because it focuses on cars in the "teens".

2) GPM helps car buyers see the true value of a Cash for Clunkers trade in. The voucher is only half the story; the other half is the value of the gas savings. Thus, GPM tools, like the GPM calculator at www.gpmcalculator.com, are essential for car dealers and car buyers during the trade in process: Know your gas savings!

3) And, in the long term, any number of policy decisions would be easier if the country adopted "gallons per hundred miles" (GPHM) to talk about fuel economy. Why? The things we care about as a country--carbon emissions, gas consumption, and personal gas costs--are a direct function of "GPHM", but not of MPG. It's as simple as: GPM can be subtracted to know gas savings; MPG cannot.